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What kind of shock was it? Regional integration and structural change in Germany after unification

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  • Burda, Michael C.

Abstract

Eastern Germany's recovery from its unification shock has been accompanied by deep structural change and a mobility race--a regional integration process involving both capital deepening and labor thinning (outmigration). A constant-returns neoclassical model of economic integration is proposed to account for these facts. Adjustment costs and initial conditions determine dynamics and steady state regional distribution of production factors. The model also explains persistent wage and capital rate-of-return differentials along the equilibrium path. Under these conditions, observed factor price differentials contain information on those adjustment costs. Journal of Comparative Economics 36 (4) (2008) 557-567.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 36 (2008)
Issue (Month): 4 (December)
Pages: 557-567

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Handle: RePEc:eee:jcecon:v:36:y:2008:i:4:p:557-567

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Web page: http://www.elsevier.com/locate/inca/622864

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Keywords: German reunification Regional integration Costs of adjustment Capital mobility Migration;

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References

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  6. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, Society for AEF, vol. 14(1), pages 121-144, May.
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  12. Michael C. Burda & Jennifer Hunt, 2001. "From Reunification to Economic Integration: Productivity and the Labor Market in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, Economic Studies Program, The Brookings Institution, vol. 32(2), pages 1-92.
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Citations

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Cited by:
  1. Krkoska, Libor & Robeck, Katrin, 2008. "Business environment and enterprise behaviour in East Germany compared to West Germany and Central Europe," Journal of Comparative Economics, Elsevier, Elsevier, vol. 36(4), pages 568-583, December.
  2. Robert Orlowski & Regina T. Riphahn, 2009. "The East German wage structure after transition," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 17(4), pages 629-659, October.
  3. Harald Uhlig, 2006. "Regional Labor Markets, Network Externalities and Migration: The Case of German Reunification," SFB 649 Discussion Papers, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany SFB649DP2006-004, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  4. Sebastian Vollmer & Hajo Holzmann & Florian Ketterer & Stephan Klasen, 2013. "Distribution dynamics of regional GDP per employee in unified Germany," Empirical Economics, Springer, Springer, vol. 44(2), pages 491-509, April.
  5. Andreas Schäfer & Thomas Steger, 2010. "History, Expectations, and Public Policy: Economic Development in Eastern Germany," CESifo Working Paper Series, CESifo Group Munich 3184, CESifo Group Munich.
  6. Juan Carlos Martinez Oliva, 2009. "Riunificazione intertedesca e politiche per la convergenza," Mo.Fi.R. Working Papers, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences 14, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.

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